# Test 1a: Partial R² — Z₁ Predicted by Observables

*How well do Soviet-era structural proxies predict Z₁, pre vs post opening?*

*If confounders hypothesis is correct: pre R² >> post R².*

| Period | R² (full) | R²(trade_openness) | R²(rule_of_law) | R²(control_corruption) | R²(nfa_gdp_lag) | R²(gross_savings_gdp) | N | Countries |
|:---|---:|---:|---:|---:|---:|---:|---:|---:|
| Pre-opening | 0.650 | 0.005 | 0.242 | 0.278 | -0.025 | -0.015 | 80 | 13 |
| Post-opening | 0.062 | -0.012 | 0.021 | -0.004 | -0.021 | -0.019 | 360 | 18 |

**Pre/Post R² ratio: 10.55×**
*Observables predict Z₁ better pre-opening → consistent with confounders hypothesis.*

*Dependent variable: Z₁. PanelGLS with entity and time effects.*
*Predictors: trade openness, rule of law, control of corruption, lagged NFA, gross savings.*